US parties miles apart on fiscal plans

The blueprint would give Republicans bragging rights that they have crafted a balanced-budget plan, even if it is based on pie-in-the-sky assumptions, such as the repeal of Obama's 2010 healthcare overhaul.
AFR

by
Lori Montgomery

Washington | Republicans and Democrats on Capitol Hill are drafting radically different budget blueprints that offer little room for compromise, even as US President
Barack Obama
presses legislators to take another shot at a far-reaching agreement to tame the national debt. On Tuesday, the House Budget Committee’s Republican chairman
Paul Ryan
rolled out a 10-year spending plan to revive the most controversial prescriptions from last year’s Republican budget, including a partial privatisation of Medicare and a repeal of the healthcare law that is Mr Obama’s signature policy achievement.

Meanwhile, the Senate Budget Committee’s Democrat chairman
Patty Murray
briefed her colleagues on a competing plan, to be released on Wednesday, to raise taxes by nearly $US1 trillion over the next decade and spend nearly $US100 billion on a new jobs package – ideas Republicans have firmly rejected.

“They’re opening bids. But they’re opening bids from three years ago," said
Robert Bixby
, executive director of the bipartisan Concord Coalition, which champions deficit reduction. “The real question is: do they start a negotiation this year? It’s not where they start, it’s where they finish. So you can take both of these budgets with a big grain of salt."

Mr Obama seemed to do that on Tuesday in a lunchtime meeting with Senate Democrats, the first of four sessions this week with rank-and-file lawmakers in both parties.

While the White House issued a statement criticising Mr Ryan’s blueprint, Mr Obama told Senate Democrats to expect a months-long debate over fiscal issues that will begin in earnest only after each legislative chamber has approved its own partisan vision for improving the economy.

A senior official acknowledged the duelling blueprints illustrate the immense challenge of trying to forge a compromise between a President and Democratic lawmakers, who insist on a big dose of new tax revenue to reduce borrowing, and Republicans, who refuse to consider any extra revenue beyond the relatively modest tax rise adopted on new year’s day.

Mr Ryan is offering the more uncompromising spending plan by far, one that Democrats say ignores the President’s convincing re-election victory.

In addition to repealing healthcare expansion, the 91-page blueprint proposes rolling back Wall Street reforms and opening federal land to oil drilling.

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Mr Ryan would also protect the Pentagon from automatic spending cuts known as the sequester by shifting the reductions to domestic agencies. And he proposes to trim domestic agencies by an additional $US250 billion over the next decade. All told, he would slice $US4.6 trillion from projected spending, with more than half of the savings – $US2.7 trillion – coming from big healthcare programs, primarily Medicaid and Mr Obama’s Affordable Care Act. At a Capitol Hill news conference, Mr Ryan defended his decision to reprise policies that Mr Obama and other Democrats opposed during the 2012 ­campaign.

“We think we owe the country a balanced budget. We think we owe the country solutions to the big problems that are plaguing our nation: a debt crisis on the horizon. A slow-growing economy. People trapped in poverty. We’re showing our answers." Full details of the plan will be available by Wednesday.

Democratic aides and lawmakers briefed on the document said it proposes to replace the sequester cuts with $1.85 trillion in alternative policies over the next decade, including nearly $1 trillion in new taxes — far more than the $600 billion Obama is seeking.